Tax Exempt Rentals

Today TaxMama® hears from Grace in the TaxQuips Forum with an interesting question. “I understand that if you rent/lease your home for production filming for 14 days or less, then that income you earn is “exempt” from California and Federal taxes. Although a 1099 will still be issued by the filming company, on our taxes we deduct that amount with explanation. The question I have is, if this same exclusion applies to commercial property we own?”

Hi Grace,

This doesn’t have anything to do with filming companies. This rule is about leasing your home to ANYONE or anything for a TOTAL of 14 days or less in a year. (it’s actually written as “less than 15 days.”) The rule only applies to your dwelling or vacation property.

Commercial property is already rental property – all the income is taxable. The whole point of commercial property IS to rent it all the time. (But, you actually had me researching to see if there WAS an exclusion. Silly me!)

And yes, when you get the 1099-MISC, you do need to report the income. After all, IRS doesn’t know that you’ve only rented it for 10 or 12 days until you tell them, do they?

This is a terrific thing to do if your town or area hosts big special events once a year that you don’t attend – like Comicon, or the Sturgis Harley rally, or the annual Grand-prix. You can rent your home to the eager attendees at a premium and use the money to escape the noisy, crowded town and go on a luxury vacation with those funds.

Ahhh, but there’s an additional special BONUS when working with filing companies. To learn about the bonus value, you’ll have to log into the TaxQuips Forum to see that information.

And remember, you can find answers to all kinds of questions about tax-exempt income and other tax and business issues, free. Where? Where else? At www.TaxMama.com.

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